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Independence and Accountability of Monetary and Fiscal Policy Committees

  • Alexander Mihailov

    ()

    (School of Economics, University of Reading)

  • Katrin Ullrich

    ()

    (Centre for European Economic Research, Mannheim)

The democratic accountability of policymaking institutions which are autonomous within delegated mandates has not received as much attention as their independence. We analyze in a theoretical model the effects of accountability inthe form of possible overriding of economic policy decisions by the government under different degrees of independence of expert committees conducting monetary and fiscal policy. The equilibrium outcomes of such alternative institution-design frameworks are compared according to key macroeconomic performance criteria. Our results stress the trade-off between anchoring inflation expectations on target and output stabilization that is not solved with accountability.

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Paper provided by Henley Business School, Reading University in its series Economics & Management Discussion Papers with number em-dp2008-72.

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Length: 53 pages
Date of creation: 24 Nov 2008
Date of revision:
Handle: RePEc:rdg:emxxdp:em-dp2008-72
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  18. Beetsma, Roel & Jensen, Henrik, 2002. "Monetary and Fiscal Policy Interactions in a Micro-Funded Model of a Monetary Union," CEPR Discussion Papers 3591, C.E.P.R. Discussion Papers.
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  22. Rogoff, Kenneth, 1985. "The Optimal Degree of Commitment to an Intermediate Monetary Target," The Quarterly Journal of Economics, MIT Press, vol. 100(4), pages 1169-89, November.
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  24. Demertzis, Maria & Hughes Hallett, Andrew, 1998. "Independently Blue? Accountability and Independence in the New European Central Bank," CEPR Discussion Papers 1842, C.E.P.R. Discussion Papers.
  25. francesca castellani, 2002. "A Model of Central Bank's Accountability," IHEID Working Papers 04-2002, Economics Section, The Graduate Institute of International Studies.
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  37. Jakob de Haan & Sylvester C.W. Eijffinger, 2000. "The Democratic Accountability of the European Central Bank: A Comment on Two Fairy-tales," Journal of Common Market Studies, Wiley Blackwell, vol. 38(3), pages 393-407, 09.
  38. William D. Nordhaus, 1994. "Policy games: Coordination and Independece in Monetary and Fiscal Policies," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(2), pages 139-216.
  39. Clive Briault & Andrew Haldane & Mervyn King, 1996. "Independence and Accountability," Bank of England working papers 49, Bank of England.
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